Dollar General Corp. (NYSE:DG)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows an overall increasing trend from 2019 to 2023, rising from approximately 1.98 billion USD in 2019 to a peak of about 3.66 billion USD in 2023. However, there is a notable decline in 2024, where NOPAT drops significantly to approximately 2.43 billion USD. This decline represents a reversal of the upward trend seen in previous years.

Cost of Capital

The cost of capital has fluctuated slightly over the years, starting at 7.24% in 2019, peaking around 7.55% in 2022, and then decreasing to 6.94% in 2024. The overall trend suggests a mild increase in the early years, followed by a gradual decline towards 2024.

Invested Capital

Invested capital has shown consistent growth throughout the period under review, increasing from approximately 18.11 billion USD in 2019 to about 26.31 billion USD in 2024. This steady rise indicates continual capital infusion or asset growth over the six-year span.

Economic Profit

Economic profit exhibits a pattern similar to NOPAT, with an upward trajectory from 2019 through 2023. It nearly triples from about 671 million USD in 2019 to approximately 1.87 billion USD in 2023. However, in 2024, economic profit declines sharply to around 606 million USD, indicating a significant reduction in value creation relative to the invested capital and cost of capital during that year.

Summary Insights

The company experienced steady growth in profitability and economic value from 2019 to 2023, supported by increasing NOPAT and economic profit values alongside growing invested capital. The cost of capital remained relatively stable with a slight downward trend towards the final year. The sharp decline in both NOPAT and economic profit in 2024 suggests challenges in maintaining profitability and economic value despite the continued increase in invested capital. This divergence may warrant a detailed investigation into operational efficiencies, market conditions, or changes in cost structure affecting performance in the most recent year.

The annual financial data indicates notable fluctuations in the profitability metrics over the presented periods.

Net Income

Net income showed a consistent increase from February 1, 2019, through January 29, 2021, rising from approximately 1.59 billion US dollars to 2.65 billion US dollars. This upward trend indicates improved profitability during these years. However, in the subsequent years, net income declined, falling to about 2.40 billion US dollars by February 3, 2023, and further decreasing to approximately 1.66 billion US dollars by February 2, 2024. This decline in net income suggests challenges impacting profitability in the most recent years analyzed.

Net Operating Profit After Taxes (NOPAT)

NOPAT similarly displayed an upward trajectory from February 1, 2019, through February 3, 2023. It grew from approximately 1.98 billion US dollars in 2019 to a peak of about 3.66 billion US dollars in 2023. This represents significant improvement in operating efficiency and profitability over this time frame. However, in the latest period ending February 2, 2024, NOPAT declined notably to around 2.43 billion US dollars, indicating a reduction in operating profitability despite the previous gains.

Overall, both net income and NOPAT exhibited substantial growth from 2019 through early 2023, reflecting enhanced financial performance and operational effectiveness. Nevertheless, the data for the most recent year reveals a marked decrease in these key profitability indicators, implying emerging issues or external factors affecting the company’s financial returns. Close monitoring and further analysis may be required to understand the drivers behind this downturn and to assess the company's future profitability prospects.

The data reflects trends in the provision for income taxes and cash operating taxes over a six-year period, from February 2019 to February 2024. Both financial items are presented in thousands of US dollars.

Provision for Income Taxes

The provision for income taxes displayed an overall upward trend between 2019 and 2023, beginning at 425,944 thousand US dollars in 2019 and peaking at 700,625 thousand US dollars in 2023. Specifically, the amount increased steadily from 2019 through 2021, reaching a high of 749,330 thousand US dollars in 2021. After this peak, the provision declined to 663,917 thousand US dollars in 2022, then rose slightly in 2023 before substantially decreasing to 458,245 thousand US dollars in 2024. This pattern suggests variability in tax expense recognition possibly influenced by changes in taxable income or tax planning strategies.

Cash Operating Taxes

Cash operating taxes also followed an increasing trend in the initial years, starting at 457,118 thousand US dollars in 2019 and reaching 823,390 thousand US dollars in 2021. This was followed by a decline in 2022 to 660,916 thousand US dollars and continued decreases through 2023 and 2024, reaching 596,198 thousand and 553,172 thousand US dollars respectively. The decline after 2021 indicates a reduction in actual cash outflows related to income taxes, which may correspond to changes in timing differences or tax provisions to cash payments.

Comparative Insights

Notably, cash operating taxes consistently exceed the provision for income taxes through 2021 but then fall below the provision in 2023 and 2024. This shift indicates a divergence between the tax expense recorded under accrual accounting (provision) and the cash paid for taxes, potentially due to deferred tax assets/liabilities or timing differences in tax payments. The peak of cash operating taxes in 2021, which is significantly higher than both preceding and subsequent years, may reflect a one-time tax payment or adjustment.

Overall, both the provision for income taxes and cash operating taxes exhibit peaks around 2021, followed by notable declines, with cash operating taxes showing a sharper descent. The divergence observed in recent years suggests evolving tax payment patterns and provision estimates that warrant closer examination for their implications on the company's tax strategy and cash flow management.

Total Reported Debt & Leases

The total reported debt and leases exhibit a consistent upward trend over the six-year period. Beginning at approximately $11.1 billion in early 2019, the figure increased steadily each year, reaching around $18.1 billion by early 2024. This represents an overall increase of roughly 63% from 2019 to 2024, with notable acceleration in growth between 2021 and 2023.

Shareholders’ Equity

Shareholders’ equity demonstrated moderate fluctuations with a slight downward trend until 2023, followed by a recovery in 2024. Initially valued at about $6.4 billion in 2019, it increased marginally in 2020 before decreasing progressively to a low of approximately $5.5 billion in early 2023. A rebound occurred in the final year to nearly $6.7 billion, almost recovering the equity levels observed at the beginning of the period.

Invested Capital

Invested capital showed a steady increase throughout the entire period. Starting at approximately $18.1 billion in 2019, it rose gradually each year, reaching about $26.3 billion by early 2024. This constitutes an increase of approximately 45% over six years, indicating continued investment and growth in capital base. The increases are consistent and without significant volatility.

Overall Analysis

The company appears to have increased its leverage significantly, as evidenced by the growing total reported debt and leases, which outpaced the growth in shareholders’ equity. Despite a temporary decline in equity through 2023, the final year saw a recovery to prior levels. The consistent rise in invested capital alongside increasing debt suggests an expansion strategy possibly funded by borrowing. The leverage position warrants monitoring due to the growing debt level relative to equity.

Economic Profit

The economic profit exhibited an overall upward trend from 2019 to 2023, increasing from $670.8 million to approximately $1.87 billion. However, in 2024, there was a notable decline to $605.7 million, representing a significant reduction compared to the previous year.

Invested Capital

Invested capital consistently increased throughout the examined periods. Starting at about $18.1 billion in 2019, it rose steadily each year, reaching $26.3 billion by 2024. This indicates substantial ongoing investment and growth in capital assets over the six-year horizon.

Economic Spread Ratio

The economic spread ratio mirrored trends in economic profit but showed fluctuations with less stability. It increased from 3.7% in 2019 to a peak of 7.55% in 2023, reflecting improved returns on invested capital during this period. However, by 2024, the spread ratio sharply declined to 2.3%, suggesting reduced profitability relative to capital invested in that year.

Overall Analysis

The data suggest that while the company expanded its invested capital steadily, its economic profit and economic spread ratio experienced volatility towards the end of the period. The peak performance occurred in 2023, followed by a marked decrease in both economic profit and spread ratio in 2024. This pattern could indicate challenges in maintaining return efficiency despite growing capital, warranting further examination of operational or market factors influencing recent profitability.

The financial data presents several notable trends over the six-year period in question. Net sales show a consistent and steady increase from 25.63 billion US dollars in fiscal year 2019 to nearly 38.7 billion US dollars in fiscal year 2024, indicating sustained revenue growth.

Economic profit also exhibits growth initially, rising from approximately 671 million US dollars in 2019 to a peak of about 1.87 billion US dollars in 2023. However, in the latest year, economic profit falls sharply to around 606 million US dollars, which marks a significant decrease compared to the previous peak.

When considering the economic profit margin, a similar pattern emerges. The margin remains stable at about 2.62% in the first two reported years, then increases substantially to reach nearly 4.94% in 2023, reflecting improved profitability relative to sales. Nonetheless, it declines steeply to 1.57% in 2024, indicating reduced efficiency in generating economic profit from sales during that period.

Overall, the data reflects a period of strong revenue growth accompanied by increasing profitability margins up to 2023, followed by a notable downturn in economic profit and margin in the most recent year. This suggests potential challenges impacting profitability despite continued sales growth.